Bank of Japan lowers growth forecast, keeps policy unchanged

The Bank of Japan lowered its forecasts for economic growth and inflation, due to the slowdown in global growth.
Noting substantial uncertainties, the central bank now sees gross domestic product for the current fiscal year expanding by 1.2%, down from the 1.7% seen before.

It pushed back the time frame in which it expects to meet its 2% inflation target, from the middle of 2016 back to next year or early 2017.

Its policy settings were kept unchanged, with the monetary authority announcing it would maintain its current pace of government bond purchases of about 80trn yen annualy. Targets for buying exchange traded funds, commercial paper and corporate bonds were also maintained.

Figures published on Friday showed 'core' consumer prices - which exclude food and energy to better reflect underlying trends - in Japan advanced at a 0.9% year-on-year pace in September, up from the 0.8% clip seen in the previous month.

Many economists had expected an expansion of the target today given that meeting the inflation target remains elusive and the economy has yet to recover.

GDP contracted in the second quarter of 2015 and may have failed to grow at all in the latest quarter.

Reports indicate Japanese policymakers had considered increasing stimulus measures in response to the building uncertainties about China and emerging markets.

Industrial production and exports are key to gauging the outlook for the economy and policy, Barclays said in a research report sent to clients on 23 October.

As of 10:26BST dollar/yen was lower by 0.53% to reach 120.48.